Credit Card Crisis: A Crash Course

The Sudden Rate Increase Fight Back Strategy

Cara, a full-time New Jersey mom of three children ages 7, 5, and 3, fought back when a sudden rate increase tried to take her money and run! She'd managed to pay all her bills on time and follow all the rules. Imagine her surprise when she saw her monthly minimum credit card payment jump from $166 to $250. That's with no new purchases…just an interest rate hike!

"I made the minimum payment every month for years and I never missed a payment. One month I made the minimum payment plus the finance charge, and the next month my interest rate was raised from 14.9 to 24.9! I don't know if that was a coincidence," she said. "I called because there was no explanation. I spoke to customer service, then a rate counselor, who told me they could raise my rate as long as my balance was over half the credit limit. They said they sent me a notice, but I never saw that notice, and I read everything! First they said I'd have to pay the higher interest rate until my account was below half because I hadn't frozen my account. They said I could call again and negotiate the rate when the balance was paid down. I kept insisting that I'd never seen the notice until they finally gave me the option of freezing my account at 14.9%."

When Cara called later to ask if the $100 in interest charges would be refunded retroactively, SURPRISE! There was no record of the first call. No lowered rate as promised, no account freeze…nothing. Just interest ticking away at 24.9%. Another mystery! "I had to go through the whole process again to get frozen," she said. "If I had not called right away to check on the $100, who knows what would have happened!"